beta-lactam induction of chromosomal beta-lactamase in gram-negative bacteria requires the transcriptional regulator AmpR and the transport of murein breakdown products (muropeptides) into the cytoplasm. In vitro transcription shows that purified AmpR acts as an activator for ampC beta-lactamase synthesis. The murein precursor, UDP-MurNAc-pentapeptide, decreases AmpR-mediated transcriptional activation in vitro, but has no effect on an AmpR(G102E) mutant that mediates constitutive activation of ampC in vivo. Addition of the muropeptide, anhMurNAc-tripeptide, which accumulates in beta-lactamase-overproducing mutants, counteracts the negative effect of UDP-MurNAc-pentapeptide, restoring the innate ability of AmpR to induce ampC expression in vitro. Cytosolic intermediates of murein biosynthesis and degradation thus act antagonistically to control beta-lactamase expression, thereby operating as a cell-wall sensing device.